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Chapter 10: Q. 20 (page 266)

The United States exports 14% of GDP while Germany exports about 50% of its GDP. Explain what that means.

Short Answer

Expert verified

Level of trade of Japan is higher than the level of trade of US.

Step by step solution

01

Step1. Given information

US exports 14% of GDP

Germany exports 50% of GDP

02

Step2. Explanation

When we say US exports 14% of its GDP, it implies the export value of US accounts for a 14% of its GDP, i.e. 14% of its economic activity comes from exports.

Similarly for Germany, it means 50% of the GDP is coming from exports.

So, we can conclude that Germnay is indulged in more trading activities, particularly exports than the US comparatively. We say it is relative because the GDP size of the countries shall be different too.

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Most popular questions from this chapter

In recent decades, has the U.S. trade balance usually been in deficit, surplus, or balanced?

Why does a recession cause a trade deficit to increase?

If you observed a country with a rapidly growing

trade surplus over a period of a year or so, would you be more likely to believe that the country's economy was in a period of recession or of rapid growth? Explain.

Describe a scenario in which a trade surplus benefits an economy and one in which a trade surplus is occurring in an economy that performs poorly. What key factor or factors are making the difference in the outcome that results from a trade surplus?

Occasionally, a government official will argue that

a country should strive for both a trade surplus and a healthy inflow of capital from abroad. Is this possible?
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